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Flawed Baucus Bill is Not the Roadmap

Posted By Stuart Butler On September 16, 2009 @ 1:03 pm In Obamacare | Comments Disabled

Senate Finance Committee Chairman Max Baucus (D-MT) has been engaged in a good-faith effort to build potentially broad bipartisan support for health care reform. If carried out on a far wider scale with members of both parties, in both houses, and with the good-faith involvement of the President, such a process could lead to the kind of bipartisan health reforms Americans would believe in. To do that, the President needs to hit the “reset” button and bring together a wide set of members with a fresh roadmap – and the Baucus bill is not that roadmap. Many of its key provisions are badly flawed. Some examples are:

While it drops explicit endorsement of a public option, the legislation creates a CO-OP which is literally an acronym for a new federal program – not the empowerment of existing co-ops – and it is in reality a thinly disguised public option.

It applies a 35 percent excise tax on higher-cost plans, together with a new sales tax on pharmaceutical, health insurers, clinical laboratories and medical device manufacturers. These taxes will be passed through to patients. While self-insured health plans, typically offered by employers and including most union-negotiated plans, will not face the insurer tax, they will still be subject to the higher-cost plan tax.

Federal taxpayers will have to pick up almost all of the cost of an expansion of Medicaid, although states will also face additional costs and yet not be granted the necessary flexibility to reform Medicaid.

A “pay-or-play” mandate on most employers will hit the incomes and jobs of low-income workers. And a mandate on individuals to purchase insurance, combined with the taxes and new rules, will push up the cost of coverage. Despite limited new subsidies for individuals, many low-income and middle-income Americans will have to pay more for coverage or break the law. This would break the President’s pledge to reduce insurance costs for families.

This is not the way to achieve bipartisan reform. The president needs instead to lead by meeting with key leaders of both parties and seek bipartisan reform around two key themes. Congress must remove legislative obstacles to states so that they can make reforms to health insurance rules and Medicaid to increase coverage. And it must reform the tax treatment of health care in order to provide tax assistance for Americans who have no tax relief for the coverage they want.


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